Exclusive: How Laughing Man Coffee’s Execs Are Mastering Franchising and Crafting a Coffee Legacy

Laughing Man Coffee & Tea Co. conquered New York’s cafe scene with its feel-good vibes, philanthropic vision and carefully chosen beans — now it’s going national through a just-announced franchising program.

But it’s not stopping there. The coffee shop and retailer that was co-founded by Hollywood star Hugh Jackman landed a Keurig deal, opened a content studio, has a music festival in the works and is on the verge of big deals with a major consumer-packaged goods (CPG) brand or two.

Co-founder and CEO David Steingard and his colleague, President Kevin LaBonge, took some time to give 1851 Franchise an inside look at their journey — from the markets they’re exploring to the challenges they face in the field and their plans for sustainable growth. It’s an entertaining and insightful read full of coffee shop franchising insights.

1851 Franchise: Tell us about your personal and professional background.

Steingard: My roots are in entrepreneurship, which I picked up from my family. And while my parents have been in many industries, it was always hospitality and coffee that resonated most with me. While I grew up taking naps on the coffee sacks at my parents' cafe in SoHo, [the Manhattan neighborhood in New York City], it took me 15 years to return to coffee. 

In those 15 years I have been a bit of a serial entrepreneur in marketing and tech. I then followed another passion of mine and went to law school to become a criminal prosecutor in New York. Leaving law to start Laughing Man has been the perfect culmination of work, joy and doing what I can to leave the world a little better than I found it. 

LaBonge: I was very fortunate to have been able to spend nearly 25 years working at some of the world's largest media companies, recently leading global licensing and partnerships for Rolling Stone, Robb Report, and other great brands.  After being introduced to David, I jumped at the chance to join a successful, mission-driven company that's looking to grow.  Anyone who meets David is inspired and I'm very much looking forward to working with him on this new franchising initiative.

1851: How did you land on franchising as your path to expansion vs. company ownership or a different form of licensing?

LaBonge: It's possible that we do both. Franchising gives us the ability to open the Laughing Man mission to both more people and more communities. We are always looking at new ideas for Laughing Man and just launched Laughing Man Studios. This new platform is one David will be leading, and he's even hosting a podcast on it. Beyond that, we're also expanding our events portfolio to include a large scale festival.  

Then on the consumer products side, we have a great partnership with Keurig to produce Hugh's House Blend and Dukale's Dream coffee pods for the retail market. It's been a great partnership and 100% of our profits from these sales go directly to our 501(c)(3) nonprofit, The Laughing Man Foundation. We're now in discussions with other food-and-beverage and CPG manufacturers to bring additional Laughing Man Coffee & Tea Co. products to the retail market. 

Steingard: The Laughing Man brand is unique in how it resonates with people — not only through our coffee offering but through the appreciation of our All Be Happy motto. So our model of creating bonds through joy lends itself perfectly to franchising as people have the opportunity to bring our system to their community. But beyond the four walls of the cafe, the Laughing Man ethos can really shine in multiple expressions vis-à-vis licensing, media and new product extensions. 

1851: What's been your biggest challenge in the franchising process, and how have you overcome it? 

LaBonge: Taking something that is working really well and has its own rhythm, like our Duane Street Cafe, and then developing a franchise concept taking the best of what it does without losing the soul of it. That took some work, but we've built a system and team that will ensure the magic of what makes Laughing Man unique is delivered in each of our new stores — be it an inline kiosk or a full-size coffee house. 

1851: Are there any markets you're focusing on in particular? 

LaBonge: Our goal is ultimately to have a national footprint, and in our initial phase of growth we will focus a bit more on the Northeast and mid-Atlantic markets from D.C. to Boston. That's not to say we won't look at other markets — we will and we are — but we do want to be intentional about our growth, so being within a few hours drive from our cafe on Duane Street will be a plus.

1851: What's surprised you the most in this process?

LaBonge: On the positive side, the quick traction we're getting from potential franchisees.  We expected a good response, but it has exceeded our expectations. On the other end of the spectrum, it's been the FDD [franchise disclosure document]. Coming from the brand licensing world, the FDD is unlike anything a licensor has to work with. 

1851: What are you looking for in a potential franchisee? 

Steingard: For the first eight years of the cafe, I was behind the bar every morning. I did that obviously to lead by example, demonstrate my kind of hospitality, oversee my baby. But it was my favorite part of the day because I truly love talking to people, being of service to the customer and knowing we were a bright spot in their day that might not otherwise go according to plan. 

So the simple answer is you have to love hospitality, you have to love your community and you have to be able to inspire that in your team. I say anyone can do it for a year, but we want people who can do it for 14 years like we have.  

LaBonge: First and foremost, they must align with our All Be Happy motto and be able to authentically bring that to their local communities. We can only be successful in the long term if we have great partners who want to ensure, as our founders' story says, "there's always a little of that original All Be Happy moment somewhere in the coffee we serve." 

1851: What advice do you have for other independent business owners considering franchising?

Steingard: This is not a hands-off enterprise. But for the person who loves hospitality and community, it's an amazing opportunity to wake up every day, get to know your regulars, and look back and feel you are part of the daily ritual of the community and this is their spot. I have a moment of gratitude even all these years later when I see the line out the door. 

Buckle up for an exciting ride. If you've built something unique that customers love, and it's profitable and can pay a franchisee back in three-to-five years, then franchising is a great way to expand and there will be partners out there for you. But keep in mind that it will be an entirely new business to manage. There is nothing better than seeing something you built resonate far and wide. 

Whether you’re an experienced franchisor looking to grow your business or an aspiring entrepreneur trying to launch your first franchise, 1851 Growth Club can help. Click here to contact us today!